SADC Payment System World Bank Report Dave C Mitchell Annual Regional Conference Centurion, South Africa September 2006
Southern African Development Community (SADC) Madagascar
The project was launched in 1996 to : Assist individual SADC countries to define a domestic payment strategy and a development plan; and Define a co-ordinated ordinated regional approach to cross-border payment, taking into consideration the implications for trade, central bank policy, foreign exchange positions and control.
Project Vision Each SADC country has : An efficient and effective payment system Internationally acceptable Interlinked within the region Supporting the SADC aims of : Free trade
Reason for the report Report to the SADC Committee of Central Bank Governors (CCBG) on the full status of the project since its inception. Highlight the impact of World Bank assistance in the development of the regional payment systems. Highlight challenges and opportunities for further development of payment systems in the region.
Structure of the report Historical background of the SADC Payment System Project. The strategic process of modernisation of regional payment systems. Projects (within the project) undertaken since 1996. Peer review or self-assessment using the FSAP Guidance Note. Capacity building issues that have been identified and that need attention.
The Payment System Project Structure Committee of Central Bank Governors Steering Group Core Team Angola Botswana DRC Lesotho BIS International Organisations Zimbabwe Country Representatives and country teams Madagascar Malawi IMF World Bank Zambia Tanzania Mauritius Swaziland South Africa Namibia Mozambique
Comment on Seychelles, DRC and Madagascar Seychelles DRC Sensitisation Workshop March 2005 Madagascar CCBG Secretariat Introductory Workshop
Different approaches to Modernisation Pure strategic approach Model-based approach Operational approach
Strategic Process Project launch Sensitisation Information gathering and stocktaking Vision and strategy formulation Conceptual design Business process specification Technical specification Procurement Development Implementation
Project Launch Involve all key stake-holders Appoint the champion project leader Analyse budgetary requirements Ensure top management support governor level
Sensitisation / Orientation Raise awareness about payment system issues Common understanding and terminology Identify challenges and opportunities Achieve buy-in by key stakeholders
Information Gathering / Stocktaking Objective Analyse the current NPS Prepare a report detailing the current situation Identify issues and user needs, strengths and weaknesses Make preliminary suggestion on the way forward
Vision and Strategy Formulation Vision Desired long term characteristics of the new NPS Fundamental principles Principles guiding the development, deployment and management of NPS Critical success factors Yardstick against which success will be measured Strategies Aligning the current system with the desired NPS
Conceptual Design High level design of business processes and support mechanism The payment process The clearing process The settlement process Roles and responsibilities of various players
Technical Specification Hardware and software requirements Instrument and message standards System availability Security features
Procurement, Development & Implementation RFP and bidding Analysis and selection of bidders Time, cost and strategic requirements Implementation
SADC Modernisation LAUNCH SENSITISATION INFO & STOCKTAKING VISION & STRATEGY CONCEPTUAL DESIGN BUS. PROC SPECS TECHNICAL SPECS DEVELOP/ PROCURE IMPLEMENTATION ANGOLA BOTSWANA DRC LESOTHO MADAGASCAR MALAWI MAURITIUS MOZAMBIQUE NAMIBIA SOUTH AFRICA SWAZILAND TANZANIA ZAMBIA ZIMBABWE
Projects undertaken under the funding of the first World Bank IDF Grant The Green Book Sensitisation workshops and annual regional conferences Other workshops SADC/BIS 1998 Harmonisation Focus groups
Projects undertaken under the funding of the first World Bank IDF Grant (cont.) Training workshops and courses Clearing Payment System Principles Strategic Management Business Analysis
Projects undertaken under the funding of the first World Bank IDF Grant (cont.) Profiling initiative (psychometric analysis) Video project Newsletter The SADC Central Bankers Website SADC Guide to Developing a Strategic Framework for Payment System Modernisation (The Guide)
Details of Expenditure - Summary First Grant : Period 1997 to 2002 Workshops and conferences Training Workshops and capacity building Country Leaders' meetings SADC Newsletter Vulindlela Guide to Developing Payment System Development Profiling/ Psychometric testing Video Project IT Forum and Harmonisation Initiatives incl. ESAF Sensitisation workshops Total USD 500,000.00
Self-funding funding The SADC-suitable RTGS Project 2000 Vision and Strategy completion RTGS the common thread Project launched to determine common business and systems requirements Economies of scale, capacity building and negotiating power 2 vendors recommended to CCBG Cost US$42 857,00
Projects under the funding of the Second World Bank IDF Grant SADC Cross-border settlement model initiatives Cross-border Model Workshop July 2004 Focus on Principles Cross-border Model Workshop June 2005 Focus on Models Presentation to CCBG in September 2005
SADC Correspondent Banking Country A Country B Central Bank Commercial Bank
Single US correspondent American Bank Central Clearing (USD) Central Control Facility (CCF) USD USD Net Settlements (Daily) A/c A A/c B In the books of a US commercial bank
Multiple currency Foreign Bank Domestic Transactions Forex Transactions Payments Trade Details Foreign RTGS Settlement Local Bank Forex Transactions Domestic Transactions Trade Details Payments CLS SAMOS Settlement
Macro economic convergance SADC Central Bank
A proposed model Central Bank Zambia Bank 1 FX Trade Information and Settlement Instructions Update DNS DNS Database FX Trade and Settlement Information FX Trade Information Bank 2 FX Trade Information and Settlement Instructions Update DNS DNS Database FX Trade and Settlement Information Central Control Facility Central Bank Botswana
Supporting workshops and seminars held during the Second World Bank IDF Grant Country Leaders Meeting & Workshop May 2003 Annual Regional Conference Sept. 2003 Annual Regional Conference Sept. 2004 CPSS/SADC Conference February 2005 DRC Sensitisation Workshop March 2005 FSAP Preparatory Workshop October 2005 Self Assessment (FSAP) Workshop March 2006
International contributions BIS CPSIPS General Guidance for National Payment System Development
Details of Expenditure - Summary Grant No. 2 : Period 2003 to 2006 Workshops, meetings and Conferences Country leaders' meeting (June 2003) Annual Regional Conference (2003) Cross-border workshop Annual Regional Conferences CPSS/ SADC conference DRC Sensitisation workshop -2005 Cross-border settlement model FSAP Workshops Sub-Total Video Project - maintenance SADC Newsletter Consultants Grand Total USD 416,500.00
FSAP Self Assessment In August 2005 Country Leaders agreed on importance for region Would allow evaluation in terms of CPSIPS Would show progress made and compliance to World Bank Finalised at workshop in March 2006
Systemically Important Payment Systems (SIPS) Country RTGS ECH / Cheques Angola X Botswana X DRC - - Lesotho X Madagascar - - Malawi Mauritius X X Mozambique X Namibia South Africa X X Swaziland X Tanzania Zambia Zimbabwe X X X
Core Principle Core Principles for SIPS Observed Broadly Observed Partly Observed Non Observed Not Applicable CP 1 6 3 3 0 2 CP 2 8 3 1 0 2 CP 3 7 5 0 0 2 CP 4 8 3 1 0 2 CP 5 2 2 2 0 6 CP 6 12 0 0 0 2 CP 7 5 7 0 0 2 CP 8 7 4 1 0 2 CP 9 6 5 1 0 2 CP 10 9 3 0 0 2
Central Bank Responsib ilities Central Bank Responsibilities Observed Broadly Observed Partly Observed Non Observed Not Applicable CBR A 11 1 0 0 2 CBR B 4 7 1 0 2 CBR C 4 4 2 0 4 CBR D 12 0 0 0 2
The Way Forward and issues outstanding in the SADC Region Regional Oversight Remittances Securities systems Capacity building Updated statistics
The Way Forward and issues outstanding in the SADC Region (cont.) Individual projects Capacity building and assistance to DRC and Madagascar Funding Funding from external sources Self funding
Acknowledgements